In certain problems of plastic flow, for example, a thick tube expanded by internal pressure, it is important to consider changes in the elastic strain of material which is flowing plastically in order to deduce the correct stress distribution and deformation. The usual plastic theory which neglects elastic strains in the plastic region may lead to considerable errors in certain cases. In this paper we review the theory of the deformation of a material under combined stresses which involves both elastic and plastic components of strain. The relationship between stress and strain is represented on a plane diagram, the reduced stress-strain diagram, which facilitates discrimination between the elastic and plastic components of strain and aids considerably the solution of certain problems. The diagram can also be used to express the relationships governing the dissipation of energy during plastic flow under combined stresses. The theory is applied to the deformation of a long thick tube under internal pressure with zero longitudinal extension. The solution is compared with that based on the usual theory which neglects elastic strains in the plastic region, revealing an error which reaches a maximum of over 60% in the longitudinal stress distribution. The significance of the differences between the two solutions is discussed in detail.